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What are the tax implications if I own foreign mutual funds?

Foreign mutual funds typically fall under the Passive Foreign Investment Company (PFIC) classification and are taxed through a system that is much more punitive and disadvantageous than their domestic counterparts. If you own foreign mutual funds, you will most likely have to include Form 8621, the Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund, with the filing of your return. We recommend consulting with an expert if you are unsure of the filing obligations related to your foreign investments.

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Updated: June 2, 2018

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